Oilfield bankruptcies ticking up for exploration and production companies as investors mood sours to oil and gas

By Renée Jean
rjean@willistonherald.com

09.05.19

Building out the Bakken and other oil patches in the country took huge amounts of capital, and led many oilfield companies to take on huge debts.

Many of these survived the downturn, but now face a new threat. Vanishing access to capital, even as all their debts begin to come due.

The S & P lists some $146 billion in debts for oil and gas that will reach maturity in the next four years or so — $9 billion of that in 2019 alone.

Meanwhile, investor cynicism has curtailed the industry’s normal routes to capital. The new “live-within-your-means” mantra already appears to be fueling an uptick in oilfield bankruptcies.

The Haynes and Boone’s Oil Patch Bankruptcy Monitor began tracking oilfield bankruptcies in 2015. According to it, there’s been a clear uptick in filings for exploration and production companies in 2019, even though the year is not yet over.

“For certain financially troubled producers wounded by the crash in 2015, some stakeholders may have given up hope that resurgent commodity prices will bail everyone out,” according to the Haynes & Boone Oil Patch Bankruptcy Monitor. “For these producers, the game clock has run out of time to keep playing ‘kick the can’ with their creditors and other stakeholders.”

Haynes and Boone list 26 filings through August in the nation’s oil patches. That figure is greater than all of 2017, and is already nearly as many bankruptcies as in 2018.

Among the 2019 bankruptcy filings was Triangle Petroleum, an independent energy company with operations focused in North Dakota and Montana.

Triangle filed for bankruptcy in Delaware on May 2019, listing aggregate debts of $169.3 million. The bulk of that was owed to JPMorgan Chase Bank and J.P. Morgan Securities.

In its court filing, the company said J.P. Morgan Securities was not willing to extend forbearance, which was set to expire on May 19.

Triangle’s two subsidiaries were not part of the bankruptcy filing in May. Those include its profitable Bakken Real Estate Development LLC and a large joint venture stake in Caliber Midstream Holdings, a pipeline and oil and gas gathering operation in North Dakota.

This was actually Triangle’s second brush with bankruptcy. Subsidiaries Triangle USA Petroleum Corporation and Ranger Fabrication filed for Chapter 11 in 2016. The companies emerged from that under the control of bondholders, which included J.P. Morgan Securities.

Halcon Resources Corporation is another of the bankruptcy filings in 2019 that will sound familiar in the Bakken. While the company is now focused on the Permian, it did have holdings in the Bakken during the boom. These were sold to Bruin for $1.4 billion in 2017. Bruin is listed as running one rig in North Dakota by the state’s Division of Oil and Gas.

Halcon’s filing this year was also its second go-round with bankruptcy court. Experts blamed the second filing on an overly ambitious projection for both prices and production.

Oilfield service companies, meanwhile, have not been immune to the new capital discipline trend — although they have suffered fewer bankruptcies.

Haynes and Boone listed 22 filings for 2018 through the second quarter of 2019 for OFS companies. Ten of those were in 2019.

However, just one of the 2019 bankruptcies accounted for almost all of the $7.63 billion in aggregate debts listed for the companies in the Haynes and Boone report.

That was Weatherford, another well-known Bakken company. It filed for bankruptcy in Texas in July, listing $7.43 billion in unsecured debt.

Mitch Melberg * Williston Herald

“People can support local businesses by buying ammo there. They
can support our local economy instead. People are still going to
buy ammo, they just don’t have to buy it from Walmart.”

— Kelsey Bail —

Mitch Melberg • Williston Herald

“That doesn’t affect me much, I don’t buy handgun ammunition
from them. For open-carry, I feel like that’s kind of going against
the people’s rights.”

— Steve Diehl —

Mitch Melberg * Williston Herald

“We should have a different store for specifically gun-related
stuff. I’m indifferent on the matter, honestly, but again I think
maybe they shouldn’t be sold at a place like Walmart.”

The North Dakota and Montana spring wheat harvest is nearing the halfway mark, and farmers are describing average to slightly above average yields in the latest USDA crop progress report.

Nationally, the harvest of spring wheat is right at 55 percent, up from 38 percent last week but still well behind the average of 78 percent.

North Dakota State University has meanwhile begun quality analysis on harvested samples. Protein is averaging 14.7 percent so far, which is similar to last year.

Average test weight is at 60.6 pounds per bushel so far, slightly less than last year. The falling number average is so far 375 seconds, which is less than 414 last year.

Higher incidences of Fusarium headblight are being reported in scattered areas, but not enough information is yet available to assess the overall impact of this on the state’s harvest.

North Dakota’s durum crop, meanwhile, is only about one-third harvested. That is well behind the usual 55 percent pace. Crop condition is rated 64 percent good to excellent, and yield potential remains promising, despite recent wet conditions.

Montana, meanwhile, has harvested 26 percent of its durum, well behind the five-year average 62 percent. Crop condition dropped again, to 57 percent good to excellent.

For winter wheat, North Dakota has harvested 88 percent of its crop, and Montana 84 percent.

Other crops also remain behind schedule for the region.

North Dakota soybeans were rated 64 percent good to excellent in the USDA report, with soybeans setting pods at 93 percent.

That’s approaching the five-year average 99 percent. Dropping leaves was 7 percent, well behind 35 last year and behind the five-year average of 25 percent.

For North Dakota corn, dough was at 72 percent, behind the 87 percent average.

Dented was 8 percent, also behind the five-year average of 44 percent. The crop is rated 74 percent good to excellent.

Canola, meanwhile, is 21 percent harvested in North Dakota, well behind the five-year average of 53 percent, and rated 69 percent good to excellent.

In Montana, Canola is 20 percent harvested, also well behind as compared to the five-year average 68 percent. Forty-one percent of the crop was rated good to excellent.

North Dakota sugarbeet was rated 75 percent excellent, and 6 percent harvested. That’s near 7 last year and the 5 percent average.

In Montana, sugarbeet was rated 65 percent good to excellent. Harvest statistics were not listed.

N.D. barley harvest

Sixty-four percent of North Dakota’s barley has been harvested, well behind 94 last year, and the 84 percent average. A condition rating was not given.

Montana was only slightly ahead, with 68 percent harvested.

Dry edible peas are 84 percent harvested in North Dakota, which is behind 97 percent last year. Montana is similar, at 83 percent harvested, behind the five-year average of 93 percent.

Dry edible beans in North Dakota, meanwhile, are also behind, with just 1 percent harvested.

That compares to 34 percent last year, and the five-year average of 14 percent. Crop condition is rated 58 percent good to excellent.

In Montana, dry edible beans are 30 percent harvested, well behind the 68 percent five-year average. The condition of the crop was rated at 28 percent good to excellent.

Lentils are at 23 percent harvested in North Dakota, behind 72 percent last year, and at 74 percent in Montana, behind 85 percent last year.

Sunflowers continue to look good in North Dakota, with 84 percent rated good to excellent.

Blooming was 97 percent. Ray flowers dried was 36 percent, well behind 81 last year and the 65 percent average.

Bracts turned yellow was 6 percent well behind 55 percent last year.

North Dakota flaxseed is at 11 percent harvested, well behind last year’s 63 percent ad the five-year average 42 percent. Crop condition was rated 74 percent good to excellent.

Flaxseed in Montana is at 10 percent harvested, behind the five-year average of 42 percent. The crops condition was rated 65 percent good to excellent.

“To a point I agree with the no open-carry, because it makes
people nervous, even the concealed carry should still be allowed,
especially in public places. But I don’t agree with the not selling
of handgun ammo, I think it goes against what we need. If you need
to protect yourself and it’s not readily available for that, then
what are you going to do?” —Gene Leathers —

Public_safety

featured

Judge orders 10 years in prison for 'mind-boggling' amount of drugs

By Jamie Kelly
editor@willistonherald.com

09.05.19

Williams County Correctional Center

Moore

Saying he’d never seen a case with more heroin involved, a judge sentenced a 46-year-old woman to 10 years in prison.

The sentence came Thursday, Sept. 5, after Michelle Moore entered an Alford plea to 17 drug counts. In an Alford plea a defendant does not admit guilt but does admit prosecutors had enough evidence that a conviction is possible.

Moore is the girlfriend of Archie Mooney, the 55-year-old man convicted last week of identical charges after a 4-day jury trial.

The pair were arrested in December and charged with possession of methamphetamine with intent to deliver, possession of heroin with intent to deliver, both class A felonies, three class B felony counts of possession of a controlled substance with intent to deliver, two class C felony and four misdemeanor counts of possession of drug paraphernalia and six misdemeanor counts of possession of a controlled substance.

Police and prosecutors said the couple had nearly 177 grams of heroin, along with large amounts of methamphetamine, cocaine, oxycodone and marijuana.

“It’s the largest amount I’ve seen in a case that’s come before me,” Northwest District Judge Josh Rustad told Moore during a hearing Thursday.

Nathan Madden, assistant state’s attorney for Williams County, asked Rustad to sentence Moore to 20 years in prison, which is the maximum sentence for a class A felony. Madden said the pair had sold nearly $300,000 worth of drugs in 2 months last year.

He also criticized Moore for failing to take responsibility. He told Rustad that Moore’s use of an Alford plea and her maintaining she was not as involved in the sale of drugs of Mooney pointed to her not accepting the harm she caused.

“If she doesn’t think it’s wrong and she doesn’t think she’s been involved, then what can you do?” Madden said.

That harm went beyond Williston, he said, because the money from drug sales went back to suppliers in other places.

“She is the face of the opioid crisis,” Madden said.

Misty Nehring, Moore’s attorney, asked Rustad to sentence her client to serve two years in prison. She said Moore had only one prior conviction, for a misdemeanor drunken driving charge, and that happened more than a decade ago.

Nehring said she understood the amount of drugs police found meant that Moore was likely to spend some time in prison, but asked that the judge look at her past actions, as well.

“It’s certainly something that should be taken into consideration,” Nehring said.

Moore apologized and asked the judge for a chance to prove she was not a danger to the community.

“I would like to apologize to the court and the people in the community for my part (in this case),” Moore said.

Rustad said he thought Moore’s limited criminal history should be considered, but that the sheer amount of drugs made the case troubling.

“There needs to not only be a personal punishment, a personal deterrence, but there needs to be a community deterrence, as well,” Rustad said of his sentence.

He sentenced Moore to 20 years in prison, but suspended all but 10 years.

She will get credit for the 275 days she spend in prison since her arrest and after her release, she will have to serve three years of supervised probation.

Mooney is scheduled to be sentenced on Oct. 18.

Regional

wire

Missouri River Basin runoff second-highest in history

09.05.19

MINOT — The second-highest runoff ever recorded in the Missouri River Basin was increased again this week as the U.S. Army Corps of Engineers released their latest projections, the Minot Daily News reported.

Significant rainfall boosted the September forecast to 54.6 million acre-feet of water, an increase of 1.7 million acre-feet from a month earlier.

The September outlook issued by the Corps for the Missouri River Basin is 215% of average, exceeded only by the record runoff of 61.0 million acre-feet in the historic flood year of 2011. Most of the water entering the system is occurring downstream from North Dakota, limiting the impact on water levels in Lake Sakakawea, which has been declining for several weeks.